Auditor highlights ‘grey area’ with windups and SuperStream
Planning ahead for any final payments into an SMSF is critical when winding up a fund as any payments made outside the windup may end up in limbo, an auditor has warned.
In a recent webinar, ASF Audits head of education Shelley Banton explained that timing is very important with the wind up of an SMSF and that any rollover as part of the windup must be carefully planned, particularly as it’ll need to be completed through SuperStream.
“Everything has to be done before that final return is lodged because that triggers the fund being wound up and once the fund is wound up, it can’t be reactivated,” she cautioned.
“So if there’s any other transactions or monies that need to be received afterwards, the fund can’t receive it.”
Ms Banton said a good example of this is the compensation payments received as a result of the Royal Commission.
“I’ve seen former SMSF trustees with cheques for several thousand dollars which are effectively worthless at the moment,” said Ms Banton.
“The ATO is aware of the issue with these payments and other payments where funds have wound up under SuperStream and they’re looking at how this can be resolved.”
Ms Banton said it is important that SMSF trustees carefully plan for any final payments that will be coming into the fund and understand what the timing is for those.
“There may be some receivables or expenses to be paid that you need to factor into the final payment for the wind up. SuperStream is still applicable for those final payments,” she cautioned.
The ATO, she said, is still determining what happens where there are payments that have come into the fund outside of the windup.
“That’s what the ATO needs to work out. I don’t know what’s going to happen, the money will obviously get rejected or just be caught in limbo.”
“At this point in time, the only [way it can be dealt with] is by sending it back to whichever party it’s come from. It may well have to be paid to the ATO. I’ve seen money paid to the ATO but that’s a lot of paperwork.
“It could get paid to the ATO and then pushed out to where the new fund is. It’s a grey area for us all and we just don’t know.”